By Chris Bruce
Dec. 10 — Morgan Stanley will pay $225 million to resolve claims involving mortgage-backed securities purchased by corporate credit unions, the National Credit Union Administration (NCUA) said Dec. 10 (Nat'l Credit Union Admn. Board v. Morgan Stanley & Co., D. Kan., No. 13-cv-02418, settlement announced, 12/10/15); (Nat'l Credit Union Admn. Board v. Morgan Stanley & Co., S.D.N.Y., No. 13-cv-06705, settlement announced, 12/10/15).
The accord resolves separate NCUA cases brought in 2013 in the U.S. District Court for the District of Kansas and the U.S. District Court for the Southern District of New York in connection with losses on the securities by four corporate credit unions — U.S. Central Federal Credit Union, Western Corporate Federal Credit Union, Members United Corporate Federal Credit Union and Southwest Corporate Federal Credit Union.
The settlement does not include an admission of fault by Morgan Stanley, the NCUA said in a statement. Morgan Stanley spokesman Wesley McDade Dec. 10 declined to comment on the NCUA's announcement
Corporate credit unions are wholesale credit unions that provide lending and various services to retail credit unions and their members, such as check clearing, electronic payments, and investments. Five corporate credit unions were seized by NCUA in the aftermath of the 2008 financial crisis.
The NCUA has since filed several lawsuits to recover losses on poorly performing mortgage-backed securities. The suits allege the sale of flawed securities contributed to the collapse of the corporate credit unions.
The NCUA said Dec. 10 that it has cases ongoing against the Royal Bank of Scotland, Goldman Sachs, UBS and Credit Suisse.
“NCUA continues to pursue recoveries on behalf of the corporate credit unions against the financial firms we maintain contributed to the corporates’ losses,” NCUA Board Chairman Debbie Matz said. “These actions fulfill our statutory obligation to act in order to minimize costs to the credit union system resulting from the crisis. They also promote accountability and ensure consumers remain protected.”
To contact the reporter on this story: Chris Bruce in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Mike Ferullo at email@example.com
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